Monday, 20 February 2012

Today promises to be a bumper 24 hours of annoying prohibitionists, for it is the day the Adam Smith Institute publishes a paper I wrote about the ridiculous plain packaging proposals. I'll post the link to the report later [UPDATE: It is here.] but, for now, here is the Adam Smith Institute's press release.

Government’s plain packaging proposals for cigarettes will bring no benefits to public

• There is no evidence that the proposals will reduce consumption or give any public health benefit.
• Plain packaging may lead to an increase in the counterfeit cigarette trade, making cheap tobacco more easily available to young would-be smokers.
• The policy creates a dangerous precedent – plain packaging could be extended to other products such as alcohol and fatty foods.

Ahead of a public consultation on the plain-packaging of cigarettes, the Adam Smith Institute have released a report today (Monday) arguing that the proposals will do nothing for public health and are profoundly illiberal. There is no evidence that plain packaging will have any effect on existing smokers or the smoking rate. The policy represents a desperate attempt by the public health lobby and government officials to be seen as ‘clamping down’ on tobacco in an increasingly maniacal war on smoking.

No Health Benefits

The plain packaging rule is aimed at stopping non-smokers from making a decision to engage in a habit. However, there is no evidence that the colour and logos on a pack of cigarettes is an influencing factor on people choosing to start smoking. Indeed, in the case of increasing the graphic warnings on packs, a comprehensive Canadian study found that “the warnings have not made a discernable impact on smoking prevalence”. Previous studies show that packaging design does little to impact the smoking rate.

Smoking numbers have not changed since 2007 with the rise of the ‘denormalisation’ of tobacco and aggressive anti-smoker policies. Aggressive anti-smoking policies don’t appear to work. Furthermore, plain packaging has been recognised as the weakest and least popular of ASH’s (Action on Health and Smoking) 12 anti-smoking policies proposed in 2008.

The Slippery Slope

Apart from the lack of health benefits there is also the risk that such a policy would be introduced for alcohol, fatty foods or sugary drinks. What happens today in tobacco tends to happen to other unhealthy products tomorrow. In fact, this slippery slope trend has already started in Australia, where they are currently planning to introduce plain packaging. As soon as the Australian government had approved the policy they swiftly moved on to look at how this could be applied to alcohol. Once plain packaging is enshrined in law for tobacco it will be easily extended to other lifestyle choices. That’s why the Adam Smith Institute argues the nanny state juggernaut must be stopped in its tracks.

Counterfeiting and intellectual property

In order to introduce plain packaging the government would need to breach international trade rules and confiscate tobacco companies’ intellectual property, without any proof that this would yield public health benefits. Furthermore, there is reason to believe the policy will have a negative effect both on public health and the tobacco industry.

Already 1 in 9 cigarettes around the world is counterfeit, with counterfeit cigarettes often having two to three times the level of heavy metals found in legitimate brands. Plain packaging will mean the standardising of cigarette packaging, which will help illicit trade. The policy is likely to boost the black market in the UK, offering cheaper cigarettes more likely to lure young and new customers. Any illicit trade can only hinder efforts to reduce smoking, so plain packaging proposals may in reality be damaging for public health.

Plain packaging, if introduced, would be a triumph of a dogmatic minority over the public. It would be an indiscriminate, illiberal law with no basis in evidence, reason or commonsense, whilst masquerading as a public health initiative. Author of the report Plain Packaging: Commercial expression, anti-smoking extremism and the risks of hyper-regulation, Christopher Snowdon, adds:

“It is extraordinary that a government which claims to be against excessive regulation should be contemplating a law which even the provisional wing of the anti-smoking lobby considered unthinkable until very recently. It seems that fanaticism has become institutionalised and a handful of extremists have become the de facto policy makers in matters related to tobacco. The public are gradually waking up to the fact that these neo-prohibitionists will never be satisfied. There is always another cause to campaign for, always new demands to be met. If it is not smoking, it is drinking. If it is not drinking, it is eating.

Plain packaging is the most absurd, patronising and counterproductive policy yet advanced under the disingenuous pretext of ‘public health’. It will serve only to inconvenience retailers, stigmatise consumers and delight counterfeiters. Those who would dictate what we eat and drink are already incorporating plain packaging into their plans. It’s time to say ‘Enough.’ The monomaniacs have had their own way for too long.”

ASH got hold of the report early doors and came up with their own press release on Friday...

A report by the Adam Smith Institute published today in advance of a public consultation on tobacco packaging advances the views of the tobacco industry, namely that putting cigarettes in plain standardised packaging would have no public health benefit, would increase the illicit trade in tobacco and would set a “dangerous precedent” for other products.

All of these arguments misrepresent the truth and ignore the fact that glitzy packs are designed to attract new young smokers to replace the100,000 in the UK who are killed each year by their habit.

Firstly, there is now a large body of evidence to show that plain packaging will be effective. Experimental studies and surveys from around the world show that plain packs are less appealing, strengthen the impact of the health warnings, and make the packs less misleading.

Secondly, there is no evidence that plain packaging will lead to an increase in tobacco smuggling. Existing packs are already easily counterfeited. Plain packs will still have to have covert markings, tax stamps and health warnings that are required on current packs so they will be no easier to counterfeit. And the argument that it will “breach international trade rules and confiscate tobacco companies’ intellectual property” is also fallacious, according to the tobacco industry’s own legal advice, revealed in litigation.

Thirdly, the “domino theory” i.e. that once a measure has been applied to tobacco it will be applied to other products is patently false. The same argument was used against the ban on tobacco advertising, but 9 years after the tobacco ban in the UK, alcohol advertising is still permitted with no sign of it being prohibited. Tobacco is a uniquely dangerous consumer product which is why there is a WHO health treaty (the Framework Convention on Tobacco Control) to regulate tobacco use.

Deborah Arnott, Chief Executive of ASH commented:

“Why would the tobacco industry and its allies be so vehemently opposed to plain packaging if they weren’t so frightened that plain packaging would work? [Er, if you read the report, you'll find out—CJS] The Adam Smith Institute, by publishing this report, is acting as the mouthpiece for the tobacco industry, as it has done on many previous occasions. It should come as no great surprise that the Institute takes a pro-tobacco line but it should be more transparent about its association with Big Tobacco.”

The Adam Smith Institute has in turn responded to the 'Big Tobacco' allegation...

We commissioned this report ourselves because it reflects our free market, libertarian ideology. Indeed, the Adam Smith Institute does not do commissioned research.

However, there are a couple of tobacco companies that have corporate subscriptions at the Institute. The revenue from this – while welcome – is not terribly significant. It amounted to less than 3 percent of our 2011 income. Moreover, neither of these companies has played any role whatsoever in the production or editing of this report. We take our independence very seriously.

The British Medical Journal asked for a response from me so I sent them this. As they probably won't publish it, I'll post it here:

I'm pleased that Action on Smoking and Health (ASH) are familiar with Adam Smith's "invisible hand" concept despite their obvious contempt for free markets and free societies. As usual, they offer not a shred of evidence that plain packaging will deter people from smoking. Their claim that counterfeiters' lives will not be made easier by making cigarette packs look virtually identical is as credible as their belief that plain packaging will not inconvenience retailers.

ASH say that it is "patently false" to think that "once a measure has been applied to tobacco it will be applied to other products". Have they been living in a cave for the past five years? The British Medical Association is currently demanding that graphic warnings be placed on wine bottles. Where does ASH suppose they got that idea from? The BMA also wants - in their own words - "a complete ban on [alcohol] advertising as has been done very successfully with tobacco." Activists in Australia are already calling for junk food to be sold in plain packaging. Rather than denying these facts, ASH should be proud that they are blazing a trail for busybodies, cranks and authoritarians of all varieties.

Well done Chris! And actually the BMJ may very well print your response. The Response editor there has always been very fair in accepting my submissions, even when they were heavily critical of "the norm" at the Journal.

I just left the following note over at the Scotsman article on this:

==

Deborah Arnott (of ASH) says, “The Adam Smith Institute, by publishing this report, is acting as the mouthpiece for the tobacco industry, as it has done on many previous occasions.”

Why is it that whenever Antismokers are confronted with reasonable arguments, their first reaction is always to either (A) Wave The Children in the air, or (B) Claim any opposition must somehow be connected to Big Tobacco?

The answer is simple: both are highly effective propaganda tools to use if you don't actually have real justifications on your side of the argument.

(A) "Waving The Children" inspires a hormonally hard-wired protective response in listeners/readers: we are biologically geared to protect our young, and, no matter WHAT the topic might be, the side that can claim to be "on the side of the children" can borrow strength from the propaganda tool.

(B) Pointing to "Big Tobacco" inspires doubts about the opponent's honesty because corporations are known to lie in their self-interest, with BT having a particularly public record of having been caught at it. It also inspires doubts about the opponent's motivations -- i.e. are they somehow being paid by BT to say what they say (which is what Arnott directly suggests with her use of the term "mouthpiece) for the Adam Smith Institute.

Mr. Snowdon's Report is valid and well-argued. It's no surprise that the fanatics who are against anything even sniffing of resembling a vague support of some aspect of something to do with smoking would choose to attack it with Ad Hominems rather than with substance.

==

Although, unfortunately, they ran it all into one huge paragraph. ::sigh::

Plain packaging is hated by the tobacco companies because it will destroy their brands and therefore them. However governments will love it for the following reason: plain packaging will lead to largely competition on price alone; the industry themselves in their published research set this out very clearly; so, price drops, government steps in to reset prices, through increased taxes and excise duties, to their pre-plain packaging levels; as a result govt sees huge increase in revenue. Basically it shifts the profits currently going to BAT, Imperial Tobacco, JT and Philip Morris to the government. And it might reduce smoking rates. Why wouldn't a govt try to introduce this. It's win-win for them. Bye bye branding.

Dave Marsh, you seem to be aware enough of the issue that you must be aware of the general ratio of tobacco company profit per pack vs. government taxation per pack.

I don't know all the details, but from what I've read over the years, here in the U.S. the base cost of a pack of cheap cigarettes before any taxes would be about $2 of which about 50 cents goes to the retailer, about 50 cents goes to the distribution, about 50 cents goes to the basic growing/manufacturing, and about 50 cents goes to the tobacco company to pay for all the advertising, executives, overhead, stock dividends, and profit.

It's only that last 50 cents where there's any flexibility. *MAYBE* theoretically, they could cut that in half and reduce the price of a pack by 25 cents or so and still survive. Even if my figures were off by a factor of 2 the difference would still be only a maximum of about 50 cents.

Meanwhile the government is already raking in almost TEN TIMES that amount in all its various taxes. My guess is that the same is true in the UK. So how does adding another 25 to 50 cents to an already pure government profit of about $5.00 represent any great benefit?

Something tells me you're not representing the argument in all its honesty.

Some sloppiness is appearing in your normally thorough research. I've not got through the first few pages before I find errors. For example in claiming to expose the power of the anti-tobacco industry you write: "Within days of victory, the coalition of pressure groups which had masterminded the smoking ban drew up a new list of targets: a ban on cigarette vending machines, graphic warnings on packs, still more duty ontobacco and raising the smoking age to 18. It is a tribute to the power of the anti-tobacco lobby that all of these policies became law over the next few years...". In fact two of these four policies were already in place in summer 2007: age raise to 18 was in the same 2006 Act as the smoking ban - final Regulations in Jan 2007; and Govt consulted on their proposals to introduce picture warnings in summer 2006, final Regulations in August 2007. You run the risk of overplaying your hand Chris - it is much easier to knock down your argument when built on falsehoods (as you are trying to show in your arguments against the anti-tobacco lobby!).

You need to get into the head of the decision makers Mike. What's their motivation.

Oh, and your info on costs is way off, speak to those in the industry, pack of 20 cigs costs pence to make <10p. There's plenty of flex here. Promotion costs have disappeared here since the market is dark (unlike US). Even if your costs were right (they are well short of the reality) you'd be talking about a 10% increase in Govt tax revenue from tobacco. Some £2bn. In the current financial climate that is too good to turn down.

"This is certainly all the evidence that the Department of Transportation needs to issue an emergency order banning e-cigs on airplanes. (We needs an underwear bomber when you can explode an e-cig?)[sic] "

I agree completely with Dave Marsh's analysis. Cigarettes will get cheaper. Excise duty will increase, although the Government knows that every increase worsens the huge smuggling, counterfeit and resale of EU purchases problem. It will be a long time before the price of tobacco in Belgium and Spain is increased to anything UK levels and, until it is, duty cannot be substantially increased.

This is another example of hysterical Propertarian bollocks masquerading as 'liberalism'.

There's too much shrieking about 'social engineering' for my liking. They do social engineering in North Korea. Here we have rules about how things are packaged, or we... like... TOTALLY.... ride roughshod over peoples HUMAN RIGHTS by telling them that they can't smoke in places where other people would mind.

Bringing 'liberal' questions into this is also a huge misdirection. This is such a trivial issue in comparison to real liberties - freedom of speech, movement etc....

Making people package things in ways that inhibit their ability to advertise to me actually increases my well-being and my freedom because I'm prepared to admit what that I sometimes respond irrationally to advertising (that's why it's called advertising and why its such a hugely profitable industry)

And the arguments about counterfeiting, and the 'slippery slope' - puh-lease! The 'plain packaging' doesn't need to be any easier to copy than the current Marlboro packaging (interesting that you're not attacking counterfieting on the grounds that it would take cash away from The Revenue, eh?)

I'd happily put all food in packaging that represents what's inside the packaging with no other coercive advertising elements. And while we're at it, I'd ban all advertising as well, like they did very well in Sao Paolo http://www.good.is/post/a-happy-flourishing-city-with-no-advertising/

Paulie ... oh dear , oh dear ... what else would you like the Govenment to do to save you from yourself...from all the other 'bad choices' you 'might' make if left to your own free will ? The terrible things you might do are legion... best we legislate against all such eventuality, then.

Anon, your information on costs may be better than mine... I freely admit I don't know the real industry figures on it. In general though I think the increased taxation has likely resulted in increased profits for Big Tobacco. Yes, they've lost some smokers, but meanwhile look at the wiggle room the taxes have given them for pricing. If cigarettes were selling at 50p/pack and a manufacturer wanted to charge 85p/pack, probably very few smokers would be willing to spend that much more per unit. But with today's prices, hiking a particular brand by 35, 50, or even 75p would go almost unnoticed... particularly since the smokers would tend to blame the government rather than the manufacturer for the increase!

Gary, the RJR cost analysis may not be accurate: I don't trust the tobacco companies any more than I trust the Antismokers. I think that 26c profit is about the same as what I saw from them over five years ago: it's hard to believe they haven't pushed it up with changing times and taxes. I figure it's somewhere in the ballpark though, which is why I used the figure of 50c.

Paulie, they didn't take Tony The Tiger off the shelves in Sao Paolo though, did they?

About Me

Writer and researcher at the Institute of Economic Affairs. Blogging in a personal capacity.
Author of Selfishness, Greed and Capitalism (2015), The Art of Suppression (2011), The Spirit Level Delusion (2010) and Velvet Glove, Iron Fist (2009).

"Of all tyrannies, a tyranny exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their own conscience."